(28 AUGUST 2017)DAILY MARKET BRIEF 2:Draghi sends the euro above 1.19 after Jackson Hole

The Eurodollar pair has spiked in Friday above 1.1950 on Draghi’s comments, its highest level since January 2015. He mentioned that he is confident about the global recovery which he considers that is improving. Yet, he added that the economic recovery has still a long way to go in Europe and in Japan compared with the US recovery.

The single currency spiked and Mario Draghi failed to limit buying pressures on the single currency. Markets pared their gains after he mentioned that more accommodative monetary policy are still needed. Next ECB meeting will be held the 7th of September and markets seem to expect too much. We believe that there are strong room for further disappointment. The inflation target is far from reached and would take more time than needed to be attained. Yet, with the bonds scarcity issue, it is going to be tough for the ECB to maintain accommodative monetary policy too long. Markets’ confidence in the ECB may be at stake at some point. The single currency will certainly head higher until the ECB meeting before bouncing lower.

By Yann Quelenn